China has overtaken Japan as the largest supplier of passenger cars to Australia, with imports from manufacturers such as BYD reaching record levels, supported by growing demand for electric vehicles (EVs).

According to government data released on June 4th, China supplied more passenger cars to Australia than Japan in April. Imports of Chinese passenger vehicles during the first four months of the year increased by 51% compared with the same period last year.

A significant proportion of these vehicles were EVs. Imports surged during March and April as consumers responded to higher fuel prices linked to the conflict involving Iran by shifting towards more fuel-efficient vehicles.

EVs and hybrid vehicles accounted for almost half of all vehicle sales in Australia in May, according to earlier data from the Federal Chamber of Automotive Industries (FCAI). BYD was the second-largest-selling brand during the month, more than doubling its market share compared with a year earlier. Toyota remained the market leader.

BYD's expansion in Australia is expected to continue. Earlier this month, the company used one of its own vehicle carriers for the first time to transport EVs to Australia. The BYD Zhengzhou recently docked in Melbourne and subsequently arrived at a port near Sydney, according to local media reports and vessel-tracking data.

Compared with a year earlier, vehicle imports increased by 25% from March. This contributed to total imports reaching a record value of AUD 45.4 billion (US$ 32.4 billion) in April, according to the government data. Fuel accounted for nearly AUD 9 billion of that total, more than double the level recorded in the same month last year.

The higher fuel bill increased imports from South Korea to almost AUD 5 billion and kept imports from Singapore above AUD 2 billion in April. According to a report by a multinational banking and financial services company, much of the increase reflected higher fuel prices, while the volume of petroleum and petrol imports declined.

Exports rose by 7% month-on-month to their highest level in three years. However, the increase in imports narrowed the goods trade surplus, with the surplus recorded during the first four months of the year reaching its lowest level since 2018.

"The trade data for April points to a partial reversal of the weakness in commodity exports" seen during the first quarter, said a senior economist at a multinational banking and financial services company.

Imports of servers and other automated data-processing equipment declined from a record high in March but remained at their second-highest level since records began in 1981. The increase reflects strong demand generated by ongoing data-centre construction projects.

The expansion of data-centre infrastructure was one of the stronger contributors to first-quarter economic growth, with private-sector investment in the sector supporting broader economic activity.

The trend is expected to continue in the current quarter and beyond. A senior economist at a multinational banking and financial services company said there is "a sizable pipeline of data centre investment that will have a material impact on economic activity and import demand over time."

"However, these effects are likely to emerge gradually over the medium to long term," an official from a multinational banking and financial services company added.